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Baidu’s Alleged Anticompetitive Tactics in Brazil

Posted on the 14 April 2015 by Angelicolaw @AngelicoLaw

Competition is a natural part of business, and the cutthroat online business world is no exception. But when competitive zeal crosses the line into tactics deemed illegal under Brazilian law, companies face consequences. And that’s what has happened to Baidu, the Chinese search engine company that allegedly used anticompetitive tactics to quash a rival.

Baidu is the maker of an antivirus app that competes against PSafe. Baidu’s anticompetitive tactics come in the form of a pop-up message that flags the PSafe app as a virus and then asks users to uninstall it, TechCrunch reports. But here’s the kicker – these messages only appear if the user’s device has a SIM card from a Brazilian cell phone operator.

While PSafe suffers from Baidu’s alleged anticompetitive tactics, PSafe is not believed to be the direct target of the Chinese company. Rather, Baidu’s rivalry is with Qihoo 360, PSafe’s largest financial backer. In 2012, Qihoo 360 entered the Chinese search engine market, igniting discontent from Baidu.

In Brazil, the competition has escalated into legal action taken against Baidu. Baidu did not initially comply with an injunction ordering the company to cease its anticompetitive behavior, which then led to a judicial order to remove Baidu’s app from the Google Play Store. The judge in the case also imposed daily fines on the company.

For its part, Baidu offered an explanation for the messages flagging PSafe as a virus. The company claims that the warnings came from a malware system that flagged the app as “high risk”. Baidu now says that PSafe’s classification has been changed to “potential risk”.

Internet law professor Ronaldo Lemos told TechCrunch that Baidu may still be violating Brazil’s Internet law, known as the Marco Civil. For example, Lemos says that Baidu’s terms of service say that China is the jurisdiction to resolve customer conflicts, but such terms run counter to the Marco Civil and the Brazilian Consumer Code.

So now it would seem that Baidu’s conflict is no longer only with PSafe and Qihoo 360. The Chinese company’s actions have brought on a larger, and perhaps more powerful rival – the Brazilian legal system.

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